By Sui-Lee Wee
BEIJING (Reuters) - China has prepared a draft law for charities to register directly with the government, making it easier for them to raise funds and gain tax exemptions, while allaying public concern over the way they are run, following some high-profile scandals.
The draft law underscores official concern about anemic charity donations in the world's second-largest economy, which ranked 133 among 135 countries rated by the World Giving Index, largely because of public mistrust of charities.
The law would give charities more means to raise funds from the public, for example, setting up donation boxes or through charity events, according to a translated excerpt of the draft viewed by Reuters. Before the law, charities mostly raised money by going house-to-house or through the Internet.
The law would allow foreign charities to be registered, though it can only do so "in cooperation with Chinese charities", according to the draft, which did not elaborate.
Aside from the difficulties raising donations, charities have also been handicapped by a requirement for them to have an official sponsor as government-backed bodies were often reluctant to take on the risk.
If it is passed, the law would allow organizations to register directly with the Ministry of Civil Affairs, according to a scholar and a charity executive involved in the drafting process.
"What they are doing is bypassing the need to write national regulations for direct registration because this will be enacted in law," said Karla Simon, a legal scholar and author of "Civil Society in China", who was consulted during the drafting process.
Li Meng, a representative from Beijing Huiling Community Services for People with Learning Disabilities, said her group has tried to register unsuccessfully in Beijing since 2000 as the Beijing Disabled Person's Federation had declined to sponsor it.
"Because we aren't registered, we have encountered a lot of difficulties in fundraising and in our financial operations," Li said.
The draft law would exempt charities from taxes and waive taxes for donors, according to Liu Youping, deputy Secretary-General of the government-linked China Charity Federation, who has seen the draft.
It is unclear when the law will be passed. The draft has not been made public yet, but has been circulated among scholars and charitable foundations. The Ministry of Civil Affairs did not respond to a request for comment.
In 2011, donations plunged after two major scandals, one involving a 20-year-old woman who had falsely described herself as the general manager Red Cross Society of China and then caused national outrage by flaunting her wealth on the Internet.
In a second incident, the Henan branch of the China Soong Ching Ling Foundation used donor funds to invest in real estate, according to local media reports.
(Additional reporting by Beijing Newsroom; Editing by Simon Cameron-Moore)